New Delhi, Jan 12 (KNN) United States of America (USA), the most important  destination for Indian exports, has assured the exporters about a possible reimbursement of  extra duty paid  on items  exported to USA after 31st December, 2017.

India exports a large number of items, duty free, under the ‘Generalised System of Preference’ (GSP) of USA.

As the present GSP system has expired on 31st December, 2017, exporters have to pay normal duty for items which were under GSP.

However, a recent communication from the Ministry of Commerce, has quoted the US Government’s advice to the exporters of items under GSP to continue filing the SPI with US Customs as required for duty free import into USA.

At the same time, the US Government’s advice has hinted at continuation of the GSP scheme on retrospective basis which may lead to reimbursement of duty paid on GSP eligible items during the intervening period.

The peculiar situation arose due to the lapsing of the GSP system and no move yet to continue the same in the future.

Besides the procedural issues, the situation becomes queerer for Indian exporters particularly the MSMEs.

The largest export from India Ready Made Garments (RMG) gets about 10% duty concession under USA GSP and till the system is reintroduced, cost of the  landed goods, in USA,  will surely be increased to that extent.

Commenting on the situation Animesh Saxena, a leading MSME exporter of RMG did not see much challenge.

“In the past also GSP was temporarily suspended but was re-introduced, so Indian exporters may temporarily carry the extra cost due to GSP withdrawal without increasing the landed cost of Garments,” quipped Saxena.

However, in the opinion of another expert on foreign trade, the situation appears to be bleak.

The Trump administration is quite unpredictable and if the GSP is not introduced, Indian exports to USA will be priced out by other countries, mentioned the experts.

He also mentioned about the shortage of working capital the MSME exporters  will face  even if they want to carry the cost due to GSP withdrawal.

Government should come out with specific guidance / package to MSME exporters of items like RMG, to bear the shock of GSP withdrawal. (KNN/ DB)